Question 1

App Developers, Inc. (ADI), enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is
A) an intended beneficiary.
B) an incidental beneficiary.
C) a delegatee.
D) an assignee.

Accepted Answer

The answer of App Developers, Inc. (ADI), enters into a...

Question 2

Delany & Sons, Inc., owes Evermore Bank $50,000. Delany enters into a contract with Floyd under which Delany promises to manage and oversee Floyd's Seaside Marina. Under the contract, Floyd promises to pay Evermore the amount that will be due Delany until his debt to Evermore is paid. Delany performs as promised, but Floyd does not pay the bank. Can Evermore succeed in a suit against Floyd? Why or why not?

Accepted Answer

The answer of Delany & Sons, Inc., owes Evermore Bank...

Question 3

Mai is a third party beneficiary under a contract between Novia and Otis. Novia and Otis can modify or rescind their contract without Mai's consent
A) at any time.
B) at no time.
C) after Mai's rights have vested.
D) before Mai's rights have vested.

Accepted Answer

As a third-party beneficiary, Mai acquires rights under the contract once they have "vested," meaning the conditions for receiving those rights have been met. Until that point, Mai has no enforceable rights and Novia and Otis can modify or rescind the contract without Mai's consent. Therefore, the correct answer is before Mai's rights have vested.

Question 4

Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda's daughter Jackie as the designated beneficiary. Jackie's rights under the contract will vest
A) automatically.
B) if she demonstrates her consent to the promise at Hilda's request.
C) if Indemnity attempts to modify the terms of the contract.
D) on the occurrence of the event for which the insurance was procured.

Accepted Answer

The answer of Hilda signs a contract with Indemnity Insurance...

Question 5

Pam borrows $5,000 from Quality Auto Sales to buy a car. When Pam does not pay the loan or return the car, Quality wants to transfers the right to the payment to Rapid Collection Agency. Rapid agrees to pay Quality for this right, but for a price that is less than the amount owed. Can Quality transfer this right to Rapid without Pam's consent? If so, and Quality committed fraud in the deal with Pam, could Pam legiti?mately refuse to pay Rapid? Explain.

Accepted Answer

The answer of Pam borrows $5,000 from Quality Auto Sales...

Question 6

Fact Pattern 16-1 
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Café is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
-Refer to Fact Pattern 16-1. Carol is
A) a delegatee.
B) an assignee.
C) an incidental beneficiary.
D) an intended beneficiary.

Accepted Answer

Carol is an intended beneficiary because the contract between Four-Square Construction Company and Ben indicates that the remodeling is a gift for Carol.

Question 7

Fact Pattern 16-1 
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Café is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
-Refer to Fact Pattern 16-1. The value of Eatery's property will increase after Carol's store is remodeled. Eatery is
A) a delegatee.
B) an assignee.
C) an incidental beneficiary.
D) an intended beneficiary.

Accepted Answer

Eatery is an incidental beneficiary because the benefit they receive from the remodeling is indirect and not intended by the parties involved in the contract.

Question 8

Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is
A) a delegation.
B) an assignment.
C) a third party beneficiary contract.
D) none of the choices.

Accepted Answer

This is a third party beneficiary contract because Lila is not a party to the original contract between Tristan and Katy, but she will benefit from Katy's house being painted and has agreed to do something in exchange (planting trees on Tristan's property). Therefore, Lila is a third party beneficiary to this contract.

Question 9

Ozzie contracts for the sale of 500 shares of stock in Premium Quality, Inc., to Ray, with payment to go to Scholar University to pay Thalia's tuition. The contract reserves to Ozzie and Ray the right to modify its terms. Scholar's right to payment is
A) not affected by the reservation.
B) subject to any change that Ozzie and Ray make.
C) limited only if Thalia agrees to any changes.
D) terminated by the reservation.

Accepted Answer

The answer of Ozzie contracts for the sale of 500...

Question 10

Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is
A) a delegate.
B) an intended beneficiary.
C) an incidental beneficiary.
D) an assignor.

Accepted Answer

New Credit Corporation is an intended beneficiary because they are expected to receive the benefit of Miranda's performance (payment of Lyle's debt) in exchange for Lyle's performance (fixing the refrigeration unit).

Question 11

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the bene?ficiary. This is
A) a delegation.
B) an assignment.
C) a third party incidental beneficiary contract.
D) a third party intended beneficiary contract.

Accepted Answer

The policy Bea takes out is a third party intended beneficiary contract, as she is naming her spouse Wendell as the beneficiary. This means that the contract is specifically intended to benefit Wendell as a third party.

Question 12

Fact Pattern 16-1 
Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Café is next to Carol's Home Store. The remodeling is a gift from Ben to Carol.
-Refer to Fact Pattern 16-1. Delta will realize a profit from the sale of prod?ucts to Four-Square to remodel Carol's store. Delta is
A) a delegatee.
B) an assignee.
C) an incidental beneficiary.
D) an intended beneficiary.

Accepted Answer

Delta is an incidental beneficiary because they benefit from the contract between Four-Square and Ben indirectly, without being the intended recipient of the contract's benefits.

Quiz 16: Third Party Rights

App Developers, Inc. (ADI) , enters into a contract with Carmen, the chief executive officer of SalesCorp, to create an app for the firm. To fulfill the contract, ADI hires Max and ten other student interns. With respect to the contract, Max is

Mai is a third party beneficiary under a contract between Novia and Otis. Novia and Otis can modify or rescind their contract without Mai's consent

Hilda signs a contract with Indemnity Insurance Company that intentionally confers a benefit on Hilda's daughter Jackie as the designated beneficiary. Jackie's rights under the contract will vest

Fact Pattern 16-1 Four-Square Construction Company enters into a contract with Ben to remodel Carol's Home Store, using products from Delta Building Supplies. Eatery Café is next to Carol's Home Store. The remodeling is a gift from Ben to Carol. -Refer to Fact Pattern 16-1. Carol is

Tristan promises to paint Katy's house in exchange for Lila's promise to plant trees on Tristan's property. This is

Ozzie contracts for the sale of 500 shares of stock in Premium Quality, Inc., to Ray, with payment to go to Scholar University to pay Thalia's tuition. The contract reserves to Ozzie and Ray the right to modify its terms. Scholar's right to payment is

Lyle and Miranda agree that Lyle will fix the refrigeration unit in Miranda's Buns n' Burgers in exchange for her payment of a debt that Lyle owes to New Credit Corporation. New Credit is

Bea takes out a life insurance policy with Vida Insurance Corporation that names her spouse Wendell as the bene?ficiary. This is